The question of fraudulent activity at major financial institutions has come recently to the fore. Large corporations like Wells Fargo and Equifax have been involved in grossly negligent behavior, affecting the lives of millions of people throughout the US. In the case of Wells Fargo, nearly 3.5 million fake accounts were made without the knowledge of customers whose credit scores suffered as a result and who in some cases had to pay extra fees for accounts they never signed up for. And in August, Equifax dropped the ball with its security, allowing private information belonging to nearly 143 million people (or 44 percent of the US population) to be stolen by hackers. According to ArsTechnica, Equifax, one of three major credit score providers, failed to run the proper security checks. Additionally, the company found out about the breach on July 29th but didn’t inform the public until over a month later, on September 7th.
Profit Motive
It’s no secret that large financial corporations, like most major companies, are generally looking to save a buck, even if that means subjecting customers to unnecessary hardship. Wells Fargo’s fiasco was largely due to sales targets forced upon employees at the bank. Employees were required to sell eight financial products to each customer, a task that proved impossible for many. To meet the high demands, workers fabricated the false accounts.
Mandatory Arbitration
To make matters worse, financial companies have introduced provisions into consumer contracts to prohibit customers from pursuing legal action in a court of law. Instead, companies include what are known as mandatory arbitration agreements into contracts. Under these provisions, complaints are funneled into private arbitration where customers aren’t likely to receive as much compensation as they would in a proper courtroom. Additionally, these agreements prevent customers from joining class-action suits against the company. For this reason, the question of suing a financial firm is a vexed one.
Essentially, the balance is often tipped against the consumer in favor of the large company, which has far more resources and knowledge at its disposal than the average customer. This makes it very difficult to imagine suing a company of that size.
Regulation
Happily, for consumers, the Consumer Financial Protection Bureau (CFPB) has published a rule that prohibits the inclusion of these agreements in consumer contracts – specifically ones issued by companies selling financial products. Of course, there has been a great deal of backlash from special interest groups and the GOP who, in July, voted for a resolution repealing the rule. The Senate has yet to visit the legislation, but it seems likely the vote will occur relatively soon. A lawsuit, filed by financial lobbyists, is also underway, seeking to upend the regulation by arguing that the structure of the CFPB is itself unconstitutional.
The rule, as observed by CNN, removes certain barriers to suing one’s bank. This is good news for many of us who rely on major financial institutions but wish to pursue lawsuits to address any negligence or wrongdoing.
Getting Help
As pointed out on CourtRoomWarrior.com, financial regulations are extremely complicated.
Determining whether your credit card company has misled you and caused you harm, can be quite tricky. But if you can prove that you’ve been misled in this way, you could have a case of fraud on your hands and thus be eligible to receive compensation for financial damages incurred via the company’s negligence. For this reason, it is a good idea to seek out the help of an attorney with experience in this field. He or she can help you work through the tangle of rules (both state and federal), so that you can maximize your potential compensation.
